Consider the model of unemployment with job separation rate s = 0.05 and job finding rate f = 0.20. If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation. If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run? If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
Consider the model of unemployment with job separation rate s = 0.05 and job finding rate f = 0.20. If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation. If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run? If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Economic Fluctuations, Unemployment, And Inflation
Section: Chapter Questions
Problem 5CQ
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- Consider the model of
unemployment with job separation rate s = 0.05 and job finding rate f = 0.20.
- If the unemployment rate U = 10,000, L = 200,000, and E = 190,000 then what will the natural rate of unemployment be? Please show your calculation.
- If U were to fall to 5,000 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
- If s were to fall to 0.03 because of an exogenous shock, how would the unemployment rate change in the short run? In the long run?
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